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Money Jihad: How Islamists Finance Their Operations

The author of the Money Jihad blogwishes to remain anonymous. The daily blog documents how Islamists finance their operations. The author previously served in military-intelligence and has been blogging about terrorism financing for three years.

The following is RadicalIslam.or’s Security Analyst Ryan Mauro’s interview with the author of the Money Jihad blog about how the Islamist terrorism continues to be lavishly funded 11 years after the attacks of September 11, 2001.

Ryan Mauro: What legal loopholes are the Islamists using to finance their operations worldwide?

Money Jihad: Saudi Arabia’s approach to terror finance is a giant loophole in and of itself. The Islamic zakat tax, what some call “Islamic charity,” is a massive source of jihadist revenues. The Saudi Arabian Monetary Agency is supposed to approve charitable zakat transfers overseas, but it’s a fig leaf; the Saudis still fund the spread of radical Wahhabism abroad. Also, it took Saudi Arabia’s Senior Ulema Council nine years after 9/11 to criminalize the financing of terrorism. Whenever the Council comments on terror finance, it vigorously defends zakat in the same breath. The Council won’t even define terrorism to include suicide bomb attacks against Israel.

In the U.S., we need a totally different approach to regulating hawala, the traditional Islamic system money transfer system that has helped fund terrorists. But on balance I would say that most of the terror finance shortcomings in the West involve inadequate enforcement of existing laws rather than a lack of laws.

Ryan Mauro: What laws aren’t being enforced and why?

Money Jihad: First, the Patriot Act prohibits providing material support to terrorism such as transferring money to Hamas. The Holy Land Foundation (HLF) trial revealed that Islamic organizations such as the North American Islamic Trust and the Islamic Society of North America worked closely with HLF. The Bush administration never intended HLF to be their final prosecution, but they ran out of time to pursue HLF’s associates. Especially now that HLF’s final appeal was rejected by the Supreme Court, this would be a great time to enforce the material support provisions of the Patriot Act against HLF’s unindicted co-conspirators.

Second, the Foreign Agents Registration Act isn’t being enforced with respect to CAIR which engages in political activities in the U.S. but is funded from abroad.

Third, the nonprofit provisions of the Internal Revenue code are being abused by Islamic organizations that claim to be charities but are actually engaged in business activities. For example, Islamic Food and Nutrition Council of America (IFANCA) is a certifier of halal foods. It gets most of its revenues from inspecting food manufacturers that seek a halal certification label, but IFANCA claims tax-exempt status on the false basis of receiving revenues from charitable donations and grants, which is discredited by a simple review of their tax forms. Canada does a better job than the U.S. of stripping bogus charity fronts of their tax-exempt status.

Fourth, Bank Secrecy Act and Treasury regulations require money services businesses, including hawala dealers, to register their business with the Treasury Department’s Financial Crimes Enforcement Network. One study showed that about 85 percent of hawala businesses simply ignore the requirement.

As to why these laws aren’t being enforced, I think it’s political.

Ryan Mauro: What methods are the Islamists using today to raise money, besides soliciting wealthy donors?

Money Jihad: Well, it’s not just about zakat from wealthy donors. Folks like Amina Farah Ali in Minnesota, Shabaaz Hussain in London, and Irfan Naseer in Birmingham have fundraised for relatively small donations from individual Muslims to support jihad overseas. A few thousand dollars from the West goes a long way to fund a holy warrior on the ground in Somalia.

But apart from zakat donations, there are a whole host of other Islamic taxes that receive less attention but are huge revenue stream for jihad. Western reporters call it extortion, but the mujahideen don’t look at it that way.

Take for example two terrorist organizations with a ground game: Al-Shabaab and the Taliban. They have fighters on the ground and control definite territory. Organizations like that rely to a great extent on levying Islamic taxes on the people under their jurisdiction. The Taliban still gets money from ushr, the Islamic tax on harvests, which includes poppy yields. Al Shabaab imposes harbor taxes, checkpoint taxes (a practice from the early days of Islam up through Ottoman times), and a zakat on the lucrative Somali charcoal trade.

Ransoms, which are also permitted against infidels by the Koran, are a major revenue source for organizations like AQIM and Abu Sayyaf. For Hezbollah, the West focuses on their drug money, but they get a lot of money from khums, the Shia Muslim tax on individual profit.

Counterfeiting, Sharia finance, street crimes, welfare fraud — those are all being used as well in different parts of the world to fund terrorism, individual Islamists or both.